If they had higher sales AND lower profit margins that certainly wasn't the plan. The perimeter departments generally have the highest margins in a supermarket and center store the lowest. The Lifestyle format was geared towards improving perimeter department sales.pseudo3d wrote:I read from old Supermarket News archives (though I don't have it with me) that the Lifestyle stores had higher sales but lower profit margins (sounds right). ... Regarding Lifestyle, I remember reading about 10 years ago that part of this was to make Safeway more "distinct" as a supermarket (I dug through my no-longer-complete BusinessWeek archives to find the article to no avail), which works into my theory of the acquired assets underperforming in their own markets, as well as their closures of several stores in each division in fall 2005. I suppose Safeway could've sold Randalls, Genuardi's, and Dominick's in that time (and rumors were they did want to sell) but if the pressure is on with Wall Street, that wouldn't have looked good to start selling off those sorts of assets (or maybe it was Safeway's pride/stupidity, who knows).
There's no doubt that the acquired assets were under performing. The acquired assets from the Steven Burd era, with the exception of Vons, were all disasters. They paid billions for Dominick's, Genuardi's and Randall's/Tom Thumb. In the end they couldn't even give Dominick's away and just closed the entire division down. They found buyers for a few Genuardi's but generally let that chain die a slow death. They never could find a buyer for the Texas stores after years of trying and finally decided to convert the best properties to the Lifestyle format and have closed almost half the original stores over the last fifteen years.
Wall Street was actively trying to convince Safeway to sell those stores. The problem was nobody was willing to buy them. That's how bad they messed them up.